The inspiration for starting OnBuy came after a gap was found in the UK marketplace.
Founder and chief executive Cas Paton said he wanted to improve retailers’ business efficiencies and create cost savings – especially for businesses that needed an online marketplace to sell their goods, and wanted to avoid the likes of Amazon.
“I’ve always been quite entrepreneurial,” Paton told Retail Gazette.
“I had done work for businesses. And the way my career’s shaped, was I became quite heavy in the ecommerce consultancy world and website development.
“I would go into businesses and my job was to see how they could improve their business efficiencies and create either cost savings or new markets for growth,” Paton continued.
“What I learned was one of the things that we were always getting companies to do was to invest in marketplace growth.
“But it occurred to me that over the years of recommending how companies would grow into marketplaces like Amazon, it became apparent that I was becoming more and more hesitant to do so because of the way that marketplaces actually work.
“I was going to companies in 2006, and saying ‘hey, you need to sell on marketplaces on Amazon, it can be really good for your business’,” Paton recalled.
“But by 2012, I thought ‘you need to be careful what you list on Amazon, you need to make sure they’re not going to take it and sell it because they’re a retailer’.
“After years of going down this path, I thought there needed to be a change.
“There was always a big gap in the industry for a hybrid between sort of an eBay and an Amazon – something that is a bit more eBay in the sense that it’s not a retailer, it doesn’t compete with its own retailers, but a bit more user friendly in terms of how you buy things – which is a lot more Amazon.
“That’s when we saw as an opportunity to launch a platform.”
OnBuy was launched in November 2016, originally working with a large investor. There were three partners, of which Paton was one of them.
As well as charging competitive selling fees on the goods retailers sell, OnBuy offers the choice of two rolling monthly subscription packages, which both allow sellers to list as many products as they want.
“We’re a catalogue system, where the customer only has to find the product once and then see who sells it and buy it, which is more convenient to the customer,” Paton added.
“OnBuy is now about to launch the world’s first global marketplace”
He also said OnBuy did not hold any stock, and has ambitions to deliver products to customers with a same-day delivery service.
“We’re giving small retailers the opportunity and the ability to be able to push back against significantly large retailers that they were previously falling behind on,” he told Retail Gazette.
“In an Amazon world, the only retailer is Amazon. Our job at OnBuy is to really remember that every single pound that moves through the company is a pound for a retailer, not for OnBuy.
“We take a commission in the transaction, but we don’t sell our own stuff, so we fight to create sales for retailers.
“We charge retailers a slightly lower fee than other platforms. All we sell is the retailer’s products – not our own stuff, so it means that the retailer is really excited to join us because they’re getting the benefit.
“We’ve learned that if you launch a new business online, you can very quickly reach a point where you get a feel for what’s working and what’s not working.
“The business has developed since we first launched. The plan was to launch something for the UK market as the UK hadn’t really had the benefit of having such a marketplace so there was that gap in the market – and we exploited that gap really well.
“After the first 18 months online, it came to our attention that the UK is not alone in this and this is when the development towards a global marketplace started.
“Our business is worth £115 million today”
“OnBuy is now about to launch the world’s first global marketplace. At the moment, we’re only UK and Ireland.”
Following a £5 million investment, Paton said OnBuy was embarking on a worldwide scale-up into over 140 countries by 2023. This will start with 40 initial sites by year-end 2020.
Meanwhile, he argued that the pandemic has not only led to more people buying online, but more consumers were now swapping cash for card payments. With more shops requiring customers to pay with card, online retailers have had the benefit of an increasing number of customers shifting online as people familiarised themselves with ecommerce – particularly the older generation.
“We don’t want this problem of handling cash. And actually, this catalyst is bigger than people realise,” Paton said.
“This is a huge opportunity for marketplaces, because the world has literally just been forced to solidify itself as an ecommerce planet.
“Our business is worth £115 million today. It might be a milestone, but we don’t recognise it yet.”
This is a far from January, when OnBuy was valued at £6 million. Paton described the online marketplace as a “rocket ship” and was ready to “put some fuel in it”. in June OnBuy closed its Series A funding round and the firm has raised a total of £5 million this year. The retailer is now set to recruit for a further 22 positions by the end of the year – increasing its workforce by more than 40 per cent amid the Covid-19 pandemic.
“In the next 18 months, we actually foresee that OnBuy is going to turn into a billion pound company,” Paton said.
“We’ve achieved 24,000% growth over our four years of trading”
“We’re in our third consecutive year of 600 per cent GMV growth and we’ve achieved a 24,000 per cent growth over our four years of trading, so it’s quite significant in terms of how fast we’ve been able to penetrate and how we’ve been able to sustain growth.”
Paton also said that while the pandemic has certainly added “value” to the retailer, the growth had plateaued for a few months as UK shops reopened in June and customers re-adjusted back to bricks-and-mortar.
Nevertheless, he added that there were customers who prioritised online shopping even after shops reopened as crowds and queues had deterred them, despite the rush for homewares and fitness trends dying down.
Paton said that during the the first UK-wide lockdown, when sites like Amazon closed their doors and sold essential products only, it showed that they were prioritising margin only.
“Retailers who relied on Amazon failed to make sales during this period,” he argued.
“We’ve been able to really protect retailers and help them to grow during these tough times. We work with a full spectrum of retailers.
“We have high street companies that we’re working to get online, we’ve got the small online retailers, we’ve got the mid to large online retailers, and large international brands.
“We work with Unilever, and we work with Mattel, and AO are on board with us right now. The interest in OnBuy is really accelerating.
“At the start of September, we had 5000 retailers online, and by the end of September, we had 5500. We increased 10 per cent in one month.”
“November is going to be our biggest trading month to date”
Paton explained that OnBuy had initially witnessed a number of its Chinese, Italian and Spanish sellers drop out in March following the strict lockdowns in those countries due at the height of the pandemic. OnBuy had also lost a number of British sellers amid the initial confusion surrounding the first lockdown.
“OnBuy has come out the other side – certainly in a stronger position as people are more comfortable buying online now,” Paton said.
Indeed, Paton said OnBuy witnessed over a 700 per cent growth in October this year, compared with October 2019 – shooting from £15 million to £115 million in annual sales. The online retailer also recently signed a deal with YouTube and ITV to raise its brand awareness.
“November is going to be our biggest trading month to date. There’s no question. We’re on TV throughout Black Friday as well,” Paton said.
“Black Friday is going to be a massive event for us. We’re bringing more retailers’ products to consumers than ever before.
“Our retailers know that we can get them the exposure they need, whereas when another marketplace like Amazon, for example, markets on TV, they get the lion’s share of the product, and the retailer is not the one necessarily benefiting.
“OnBuy still has lots of exciting things in the pipeline to make it more relevant. We are growing really quickly.
“But don’t ever for a second think that just because we’re selling at £115 million at the moment that we are established and we’ve completed our initial journey.
“We’re still a growing young company. We still got 1,000,001 things to deliver.”